Selling a Business – What is the Brokers Role & The Advantages of Using a Broker when Selling

What is a Business Broker?
A business broker is an agent specialising in buying and selling businesses. The primary function of a business broker is to find buyers for sellers and sellers for buyers, helping to mediate between the two to achieve a satisfactory sale. A business broker is most often retained by sellers – the broker acting to market the business and find a suitable buyer, and the seller paying a fee. But a business broker may also be retained by a buyer – here the brokers acts to research, locate and approach businesses of interest to the buyer. In this case, it is the buyer who pays a fee.

While a business broker will obviously seek to achieve the best possible deal for a seller, the best brokers will aim to achieve a fair deal for both sides. Today’s buyer may be tomorrow’s seller, and vice versa. Established business brokers will care about their long term reputation within the business community and will therefore be motivated to act as impartial intermediaries, regardless of who is paying the completion fee. Axis Partnership have been specialist business brokers for many years, building up an enviable reputation within the industry. We aim always to achieve a win-win situation for sellers and buyers.

What is the Broker’s Role?
A broker’s role is to mediate between buyer and seller to agree a deal and achieve a sale. In practice this involves undertaking many different tasks to help make this happen.
At Axis, our brokers remain involved at all stages, providing assistance to both sides as necessary to achieve a successful deal.
Here is a summary of the main tasks undertaken by an Axis broker acting on behalf of a seller:

1. We arrange company valuation and advise on a realistic asking price for the company. We can also advise on the strengths and weaknesses of the company and how best to present the company for sale.
2. We ensure confidentiality so that staff, clients and competitors do not become aware of sale.
3. We create marketing material to promote the company including an information memorandum.
4. We actively market the company through a range of channels, including our own website and through our network of registered buyers.
5. When potential buyers come forward we ensure they sign legally binding confidentiality undertakings before providing them with any information. We also credit check buyers to ensure that funding is in place, there are no CCJ’s in force, and so on. All this ensures that the seller deals only with serious and suitable buyers.
6. We help to negotiate offers to achieve the best total consideration and terms for a deal.
7. We draft Heads of Terms to allow seller and buyer to inspect the deal before proceeding to instruct solicitors. This minimises solicitor’s costs for both sides.
8. We recommend solicitors or other specialists who are proven in dealing with mergers and acquisitions.
9. We liaise with accountants, solicitors, bank managers through the legalities up until completion to handle any issues raised.
10. We liaise with clients throughout the whole process to ensure they are updated and to iron out any glitches that may occur along the way.

The Advantages of Using a Broker When Selling
While it is possible to sell a business without using a broker, there are several significant advantages of using a broker when selling a business.

The first key, practical advantage is expertise. A business owner will be an expert on running his own business, but is unlikely to also have the expertise necessary to sell it successfully. A business broker will have in depth knowledge of the market, and will know about all aspects of the selling process. An experienced broker will also have established methods for finding and contacting buyers. This allows you to be marketed to the highest number of potential buyers increasing the likelihood of sale and achieving the best price. Many business owners find that the increase in price achieved by having a broker find exactly the right buyer (or even finding several buyers competing to buy the business) more than pays for the costs of hiring a broker.

The second advantage is time. Marketing the business, finding suitable buyers and negotiating deals can be very time consuming. A busy business owner is unlikely to be able to spend this amount of time on the selling process while also running the business on a day to day basis. Having a business broker carry out these tasks on your behalf means that you only need to spend time on the important decision-making elements of the process, such as agreeing the details of the deal.

A further significant advantage of using a broker is confidentiality. Actively selling the business yourself would be hard to conceal from colleagues, staff or competitors, and many business owners prefer to keep their sale plans confidential until the later stages of a sale. By using a broker, the initial stages of the sale can be kept confidential. The broker can take steps to ensure that the company is marketed outside the immediate geographical area, and that descriptions of the company do not reveal its identity. The broker further enhances confidentiality by ensuring that interested buyers sign non-disclosure agreements before being given identifying information about the company.

One of the biggest advantages of using a broker when selling your business is their ability to conduct detailed negotiations on your behalf. As well as helping to negotiate the best possible deal for you, they can also suggest amendments to the deal if negotiations get stuck. Having this type of negotiating skill at your disposal can often make the difference between a deal falling through and a successful sale.

Finally, a major advantage is having a broker see your deal through to completion. The upside of paying a broker fee is that the broker only gets paid if the deal goes through. This makes them highly motivated to ensure that all sides are moving forward and are kept well informed about progress.

Why Choose Axis Partnership as Your Business Broker
Axis have been providing proactive, confidential brokering services to business owners for 14 years. We operate throughout the UK and in a number of specialist sectors including Property Management, Recruitment, Healthcare, Manufacturing and others. We may not be the cheapest agent, but our fees are competitive and offer value for money in terms of the sale price we are able to achieve, and in terms of the increased likelihood of a successful deal.

For more information on the Advantages of Using a Broker when Selling or for a confidential valuation of your business, please click here to contact us.